edge init

This is a discussion on edge init within the First Steps forums, part of the Reception category; Originally Posted by ChocolateDigestive that's interesting. So do you believe it is possible to be profitable without a trading edge? ...

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Old Jun 26, 2012, 8:03pm   #21
 
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Re: edge init

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Originally Posted by ChocolateDigestive View Post
that's interesting. So do you believe it is possible to be profitable without a trading edge? for example trading purely from the gut? or maybe the gut is the edge?
Depends what you mean by gut i guess. If you mean "The bottom is in here i can feel it! im buying" type stuff. Maybe for some, but ive never really been able to do it.
When i talk about edge being psychological i mean more towards how you enter and exit. Two traders can see the trend in a technical way but aim to enter enter and exit (at profit or loss) in different ways. ie maybe one could take a break out with a set stop, the other could take a limit in and out. They both have the same technical view of things but have different attitudes towards risk. I could be wrong but currently thats the only real place i can see anything like an edge.
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Old Jun 26, 2012, 8:06pm   #22
 
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Re: edge init

my definition below and what I believ emy own edge to be is an extension olnthe Mark Douglas definition.

A Trading Edge is a repeating circumstance or set of circumstances (ie a repeating set-up or repeating combination of set-ups) that suggest a greater probability of price moving one way over another within your stop - based on a large sample historical precedent. Additionally and/or alternatively; if the edge does not suggest a greater probability of this one outcome over another, then based on the large sample historical precedent, it suggests that more gain is available when that outcome occurs than when it doesn't - sufficient to realise a net gain over any given future sample.

An earlier poster suggested that they thought that their psychological skills gave them an edge/improved their edge and I certainly concur with this - others may have just such a gut feeling edge as the OP suggested but for most the psycholgical skills can enhance an edge.

As for validation of an edge - any forward test has to resemble the back test metrics and then 2 further forward tests of the same type may be a good start before committing live money.

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Last edited by bbmac; Jun 26, 2012 at 8:35pm.
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Old Jun 26, 2012, 8:08pm   #23
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Re: edge init

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Originally Posted by the hare View Post
If you read my posts, you'd know this is a subject that I'm constantly discussing
I just assumed your posts were about Baghdaddy and didn't pay too much attention.


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Originally Posted by the hare View Post
You'd also understand why I advocate using random trades as part of the methodology when designing an edge.

I can tell you precisely what the market edge is for a number of markets, across a range of time-frames and trade durations. That's arguably the first step of designing an edge knowing what you have to overcome.

I've even see this being discussed quite recently on public domain trading sites, and I've even seen people quantifying that edge It might not be discussed at the zoo, but it is discussed amongst traders quite openly

On top of the mechanical edge working against you, there's definitely some psychology at play too. I have yet to find a new trader who can outperform a random system based on coin tosses
You know random technique works. But I am one step further than you and know why random technique works - in a liquid market of course. In a flat market, neither coin toss nor tossing the noob would work.
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Old Jun 26, 2012, 8:24pm   #24
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Re: edge init

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You know random technique works. But I am one step further than you and know why random technique works - in a liquid market of course. In a flat market, neither coin toss nor tossing the noob would work.
I can assure you, I've been doing this for a very long time, and working with some very smart people, and I know exactly why my edge works

if you don't believe me, check out dr zuppys old posts from back in the day when he was still prepared to let cats out of bags.
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Old Jun 26, 2012, 8:28pm   #25
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Re: edge init

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I can assure you, I've been doing this for a very long time, and working with some very smart people, and I know exactly why my edge works

if you don't believe me, check out dr zuppys old posts from back in the day when he was still prepared to let cats out of bags.
Do you have a link to the thread ? I will be happy to have a look at the cats and the bags and see where you are coming come and what your edge is. I will know an edge when I see one. The law of win is as omnipotent as the law of gravity. No edge can escape its grasp.
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Old Jun 26, 2012, 8:50pm   #26
 
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Re: edge init

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Quote:
Originally Posted by the hare View Post
I can assure you, I've been doing this for a very long time, and working with some very smart people, and I know exactly why my edge works

if you don't believe me, check out dr zuppys old posts from back in the day when he was still prepared to let cats out of bags.
I remember reading some of zupcons posts. I wonder where he got to?
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Old Jun 26, 2012, 9:08pm   #27
 
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Re: edge init

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Not winning consistently over the long term is not a certainty. Although the people who win over the long term are small, there is no certainty that says it can't be you. Hence staying in the game as long as you can increases your chance despite the casino's edge. The casino's edge works against the aggregate of all their customers and not necessarily against you. Basically, both the casino and you can be winners simultaneously without violating the laws of probability.
Not true as each gambler is an independent random variable as far as the casino is concerned. I'd love to see the maths you'd use to prove your point.

Bottom line is that you need an edge of course, but what that is can vary significantly from person to person. In each case it could be summarised as a process, even if the successful trader felt it was 'gut'.
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Old Jun 26, 2012, 9:49pm   #28
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Re: edge init

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Not true as each gambler is an independent random variable as far as the casino is concerned. I'd love to see the maths you'd use to prove your point.

Bottom line is that you need an edge of course, but what that is can vary significantly from person to person. In each case it could be summarised as a process, even if the successful trader felt it was 'gut'.
So long as the probability of 21 winners in a row is not 0 for playing black or red, you could come out a millionaire. As to who this will happen to or when this will happen to, nobody knows. There's no law that says it can't be you or it can't be tonight. To win it, you really just have to be in it. No other criteria or edge is necessary. So get to the casino ASAP. Likewise for lotto, in it and you will have a chance. Likewise in the market, in it and you will have a chance.
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Old Jun 26, 2012, 9:55pm   #29
 
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Re: edge init

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Originally Posted by barjon View Post
Aye, you don't want to ride your luck too much. Probably safer to write a book (or worse ) about the spectacular success of your "method".
History has shown that this is the unfortunate route that many people take.
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Old Jun 26, 2012, 9:58pm   #30
 
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Re: edge init

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So long as the probability of 21 winners in a row is not 0 for playing black or red, you could come out a millionaire. As to who this will happen to or when this will happen to, nobody knows. There's no law that says it can't be you or it can't be tonight. To win it, you really just have to be in it. No other criteria or edge is necessary. So get to the casino ASAP. Likewise for lotto, in it and you will have a chance. Likewise in the market, in it and you will have a chance.
The chance of your 21 winners in a row is 0.0000268%, so no its not zero, but as close as makes no difference. In anything where μ is less than the aggregate value of my bets I'll pass thanks and spend the time practicing my edge.
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